Asset Services Insights - Fall 2016 (External)

BAY AREA REAL ESTATE Cushman & Wakefield employs more than 800 professionals in the Bay Area including more than 350 brokers in 15 offices. In 2016, local business journals ranked Cushman & Wakefield as the Top Commercial Real Estate Brokerage Firm in San Francisco and Silicon Valley, and Top 3 in the East Bay, Peninsula, Sacramento, and North Bay markets. According to CoStar, Cushman & Wakefield leased more square footage Bay Area-wide in 2015 than any other firm. In 2015, Cushman & Wakefield had more than $11.7 billion in transaction volume. Cushman & Wakefield’s Asset Services team ranked No. 2 in the Bay Area with 49.5 million square feet (msf) of assets under management—46.5% industrial and 46% office. ASSET SERVICES The Bay Area remains near the top of investors’ wish lists—Silicon Valley/ East Bay and San Francisco/Peninsula were among the top 10 markets in the US in 2Q, with $5.54 billion total sales. Office accounted for 55% of the total investment activity ($3.04 billion), followed by multifamily ($1.08 billion)

OFFICE Seven distinct office markets comprise a total office inventory of 260.1 msf. The largest of these is San Francisco County, at 77.2 msf, with Santa Clara County (Silicon Valley) not far behind with 70.5 msf. The Bay Area office market slowed over the first half of the year but that is coming off several years of record expansion. In the first half of 2016, leasing activity totaled 12.2 msf, down from 17.6 msf in the first half of 2015. Technology firms still drive leasing, with the top four deals of 2Q including Qualcomm (380,000 sf in San Jose), Fitbit (306,000 sf in San Francisco), Lyft (206,000 sf in San Francisco), and Stripe (102,000 sf in San Francisco). The three San Francisco transactions were subleases—generally fully built-out space with very little capital expenditure needed. Sublease availability has climbed sharply over the past two quarters, but quality space has been moving quickly. Expect Bay Area office activity to expand for the next 12-18 months, but at a more measured pace.

and retail ($290 million). Asset management clients in the Bay Area are open to change in the workplace including added amenity space in lobbies and buildings to compete with the new construction, and pop-up retail or food carts to enhance the tenant experience. A trending challenge for owners is to contend with higher density occupancy, in some cases down to 100 square feet (sf) per FTE. More people generate higher expenses including janitorial, elevators, accommodation of bicycles, 24/7 ingress and egress to the building, security, and more HVAC use. “If tenants are happy and healthy in their buildings, these buildings remain well- leased and asset values are enhanced over time. Asset Services is rightfully proud of our reputation for incredible service to our tenants in Northern California, and of our resulting, enviable market position,” said JD Lumpkin,

Executive Managing Director, San Francisco Market Leader.

BAY AREA: BY THE NUMBERS

THE OFFICE 800 employees

$36.6M revenue CAPITAL MARKETS

$11.7B 2015 transaction volume

ASSET SERVICES 184 professionals

LEASING $203M revenue

49M square feet managed

$15.5M revenue

$6.6M projects managed PROJECT MANAGEMENT

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